We all have habits, of course; both good and bad. Yet, it seems to me that when the word ‘habit’ is used it is more often than not preceded by ‘bad.’ Certainly, the consequences and impact of ‘bad habits’ can be devastating if not corrected; but bad habits don’t change by themselves, either in our personal lives or in business. Changing them takes a willingness and commitment to change and often just plain hard work. However, many of them are so ingrained in our actions that we don’t even know we have them. Yet sometimes all it takes is a focus on changing one thing and other positive changes fall into place.

A while back I ran into a book on habits called The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg. Duhigg, besides being an author, is also a journalist for the New York Times and his book is a very insightful look into how habits shape not only our personal lives but our professional lives as well.

One particularly interesting chapter centered on Alcoa Aluminum. In the late 1980’s the Company was in trouble and brought in a new CEO named Paul O’Neill to fix things. Of course, Alcoa had been virtually a household name for decades making the aluminum that goes into everything from pop cans to our cars. Anyway, in his introduction to the investment community, O’Neill, rather than talking synergies, shareholder value, ways to increase cash flow and stock price, came out and talked about something completely different: worker safety!

As Duhigg reports, O’Neill realized very early on there was a critical need to break some very bad business habits ingrained into the culture of the company which were leading to high worker injury rates. Those injury rates were symptomatic of some very deeply ingrained bad business habits that were also damaging the company.

Quoting Duhigg and O’Neill: “So how did O’Neill make one of the largest, stodgiest, and most potentially dangerous companies into a profit machine and a bastion of safety? By attacking one habit and then watching the changes ripple through the organization. ‘I knew I had to transform Alcoa,’ O’Neill told me [Duhigg]. ‘But you can’t order people to change. That’s not how the brain works. So I decided I was going to start by focusing on one thing. If I could start disrupting the habits around one thing, it would spread throughout the entire company.’ O’Neill believed that some habits have the power to start a chain reaction, changing other habits as they move through an organization. Some habits, in other words, matter more than others in remaking businesses and lives. These are ‘keystone habits,’ and they can influence how people work, eat, play, live…”

Well, I will leave it to you to read the whole story, but O’Neill turned the company around by breaking bad habits which had caused not only huge decreases in worker productivity, they also improved the safety and efficiency of the manufacturing process. So, while breaking the company of bad habits he not only reduced on the job injury, he also revived a company moving rapidly toward extinction. Amazing story.

So, what about your business habits? One thing we encourage our clients to do is look with fresh eyes at how they are handling their delinquent accounts and how much may be driven by habit, and not good business practice.

One area to specifically focus on is the detail of the information you receive from your customers. Do you regularly review the content of the agreements your customers sign obligating them to pay you for your services? Clear understanding of payment terms is beneficial to both parties, and will not only ensure you have the best document in the event you incur a debt which needs the help of a company like ours, it also ensures you are in line with the most recent changes in the law.

Don’t let unrecognized bad habits cause unintended consequences for your business! A Alliance is here to help make sure your bad debts are collected in the most efficient and professional way possible.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners. Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.

I would never recommend this telephone approach to collect an unpaid invoice, however, I know this is what many small business owners are thinking when making that call for payment on a past due receivable. You work hard and spend your money on materials to assist your customer, and now you are calling to be paid after being ignored for too long.

A big challenge for some small business owners comes when it’s time to be paid. Fortunately, with a little preparation, you can speed up your revenue cycle, and develop the business radar that sounds off when an account is headed for collections. Using effective communication techniques, and working with financially troubled clients through tough times, you may end up with devoted customers for life.

Late-paying customers usually fall into one of three categories. 1. Customers who are willing to pay and acknowledge they owe you. But because they have real financial problems, can’t pay on time. They are typically willing to communicate. 2. Customers who prefer to delay payments. They may send you a little bit here and there, and will avoid you if possible. 3. Customers who avoid any payment. They will break promises to pay you and they may even skip town.

You may be able to manage debts in the first two categories by convincing the debtors to make partial or full payment. But you need to recognize what type of debtor you are dealing with, and do so as quickly as possible. Even though asking for money can be an uncomfortable, don’t delay. The longer you wait, the harder the money will be to collect. Prioritize those debts you can work on internally. Those debts, if any, you determine will be too time-consuming or too costly to work in-house can then be sent to a collection agency.

One rule always applies to effective collections: Get busy as soon as possible and stay on the account until you’re paid. Send bills promptly and re-bill monthly. Send past due notices promptly once an account is overdue.

Here are some more tips:

Don’t harass. But let the debtor know you follow these matters closely. Don’t leave more than one phone message per day for a debtor. No threats!

When making a collection call, be direct, listen, and don’t get personal. Keep your calls short and be specific. Always stay calm but always maintain a sense of urgency about getting paid. Prevent the debtor from taking your call for payment as a personal affront. It’s not personal. It’s business.

Write demand letters. Along with phone calls, send a series of letters that escalate in intensity.

Be creative. If the customer has financial problems, ask what amount can be realistically paid. Consider extending the time for payment if the customer agrees to a new payment schedule. Monitor the payment agreement.

It’s imperative to recognize what debt accounts will become delinquent and turn the debt account over to a collection agency pronto. Turning a debt over to collections can save you time and money, not to mention the aggravation of dealing with those unwilling to pay. The sooner your collection agency is able to begin working on a debt account, the more likely a collection will be made. When the debt account has gone unpaid for too long (90-120 days), chances are the debtor has broken more than one promise to pay you, or the debtor has skipped town. It’s time to turn it over without further delay.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners. Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.